Vertical Software Stocks Q1 Results: Benchmarking Guidewire (NYSE:GWRE)
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how vertical software stocks fared in Q1, starting with Guidewire (NYSE:GWRE).
Software is eating the world, and while a large number of solutions such as project management or video conferencing software can be useful to a wide array of industries, some have very specific needs. As a result, vertical software, which addresses industry-specific workflows, is growing and fueled by the pressures to improve productivity, whether it be for a life sciences, education, or banking company.
The 4 vertical software stocks we track reported a mixed Q1; on average, revenues beat analyst consensus estimates by 2.4%. while next quarter's revenue guidance was 0.8% below consensus. Stocks--especially those trading at higher multiples--had a strong end of 2023, but 2024 has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, but vertical software stocks have shown resilience, with share prices up 5% on average since the previous earnings results.
Guidewire (NYSE:GWRE)
Founded by two individuals involved in the development of leading procurement software Ariba, Guidewire (NYSE:GWRE) offers insurance companies a software-as-a-service platform to help sell their products and manage their workflows.
Guidewire reported revenues of $240.7 million, up 16% year on year, exceeding analysts' expectations by 4%. Overall, it was an ok quarter for the company with a decent beat of analysts' billings estimates but a decline in its gross margin.
“Our outstanding third quarter results were driven by strong Tier-1 deal volume and an acceleration in migration activity, particularly in Asia Pacific,” said Mike Rosenbaum, chief executive officer, Guidewire.
Guidewire scored the fastest revenue growth of the whole group. The stock is up 26.4% since reporting and currently trades at $136.55.
Is now the time to buy Guidewire? Access our full analysis of the earnings results here, it's free.
Best Q1: Manhattan Associates (NASDAQ:MANH)
Boasting major consumer staples and pharmaceutical companies as clients, Manhattan Associates (NASDAQ:MANH) offers a software-as-service platform that helps customers manage their supply chains.
Manhattan Associates reported revenues of $254.6 million, up 15.2% year on year, outperforming analysts' expectations by 4.6%. It was a decent quarter for the company with full-year revenue guidance topping analysts' expectations but a decline in its gross margin.
Manhattan Associates scored the biggest analyst estimates beat and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 5% since reporting. It currently trades at $242.18.
Is now the time to buy Manhattan Associates? Access our full analysis of the earnings results here, it's free.
Weakest Q1: Bentley (NASDAQ:BSY)
Founded by brothers Keith and Barry Bentley, Bentley Systems (NASDAQ:BSY) offers a software-as-a-service platform that addresses the lifecycle of infrastructure projects such as road networks, tunnel systems, and wastewater facilities.
Bentley reported revenues of $337.8 million, up 7.4% year on year, in line with analysts' expectations. It was a weak quarter for the company with a miss of analysts' billings estimates.
Bentley posted the weakest performance against analyst estimates in the group. As expected, the stock is down 8.8% since the results and currently trades at $48.80.
Read our full analysis of Bentley's results here.
Alarm.com (NASDAQ:ALRM)
Founded in 2000 as a business unit within MicroStrategy, Alarm.com (NASDAQ:ALRM) is a software-as-a-service platform that enables users to control their security systems and smart home appliances from a single app.
Alarm.com reported revenues of $223.3 million, up 6.5% year on year, surpassing analysts' expectations by 1.6%. Taking a step back, it was a good quarter for the company with a decent beat of analysts' billings estimates but full-year revenue guidance missing analysts' expectations.
Alarm.com had the slowest revenue growth and weakest full-year guidance update among its peers. The stock is down 2.6% since reporting and currently trades at $66.89.
Read our full, actionable report on Alarm.com here, it's free.
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